Gemini Space Station, Inc.GEMI
Gemini Space Station, Inc. Income Taxes Disclosure
Income Taxes
The components of income (loss) before income taxes were attributable to the following regions (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Domestic | $ | (609,696) | $ | (146,955) | $ | (320,956) | |||||||||||
| Foreign | 20,896 | (3,965) | (2,793) | ||||||||||||||
| Total | $ | (588,800) | $ | (150,920) | $ | (323,749) | |||||||||||
Provision for (benefit from) income taxes consisted of the following (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current | |||||||||||||||||
| Federal | $ | — | $ | — | $ | — | |||||||||||
| State | 970 | — | — | ||||||||||||||
| Foreign | 721 | 597 | 646 | ||||||||||||||
| Total current | 1,691 | 597 | 646 | ||||||||||||||
| Deferred | |||||||||||||||||
| Federal | (7,254) | 6,609 | (4,962) | ||||||||||||||
| State | (473) | 470 | 109 | ||||||||||||||
| Foreign | 49 | (50) | 133 | ||||||||||||||
| Total deferred | (7,678) | 7,029 | (4,720) | ||||||||||||||
| Total (benefit from) provision for income taxes | $ | (5,987) | $ | 7,626 | $ | (4,074) | |||||||||||
The table below provides the updated requirements of ASU 2023-09 for 2025. See Note 2. Summary of Significant Accounting Policies—Recent accounting pronouncements for additional details on the adoption of ASU 2023-09.
The effective income tax rate for the year ended December 31, 2025, differs from the statutory federal income tax rate as follows (in thousands, except percentages):
| Year Ended December 31, 2025 | ||||||||||||||
| $ | % | |||||||||||||
| Provision for income taxes at U.S. federal statutory rate | $ | (123,648) | 21.00 | % | ||||||||||
State and local income taxes, net of federal benefit(1) | 497 | (0.08) | % | |||||||||||
| Effect of cross-border tax laws: | ||||||||||||||
| Global Intangible Low-Taxed Income ("GILTI") | 5,913 | (1.00) | % | |||||||||||
| Foreign Tax Effects | (2,865) | 0.49 | % | |||||||||||
| Tax credits: | ||||||||||||||
| Research and development ("R&D") credits | (470) | 0.12 | % | |||||||||||
| Foreign tax credits | (715) | 0.08 | % | |||||||||||
| Valuation allowance | 24,985 | (4.24) | % | |||||||||||
| Non-taxable or non-deductible items: | ||||||||||||||
| Non-deductible compensation | 4,582 | (0.78) | % | |||||||||||
| Income taxed at the partner level | 75,552 | (12.83) | % | |||||||||||
| Other: | ||||||||||||||
| Change in Tax Status | 9,057 | (1.55) | % | |||||||||||
| Other | 1,125 | (0.19) | % | |||||||||||
Total (benefit from) provision for income taxes and effective tax rate | $ | (5,987) | 1.02 | % | ||||||||||
| __________________ | ||||||||||||||
| (1) State taxes in New York and California made up the majority (greater than 50%) of the tax effect in this category. | ||||||||||||||
As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows:
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Provision for income taxes at U.S. statutory rate | 21.00 | % | 21.00 | % | |||||||
| State taxes, net of federal benefit | (0.25) | % | 0.07 | % | |||||||
| Income not subject to income taxes | (23.07) | % | (19.55) | % | |||||||
| Provision to return | 0.21 | % | 0.29 | % | |||||||
| Foreign rate differential | (0.75) | % | (0.12) | % | |||||||
| Valuation allowance | (2.17) | % | (0.18) | % | |||||||
| Other | (0.02) | % | (0.25) | % | |||||||
| Effective income tax rate | (5.05) | % | 1.26 | % | |||||||
Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of the Company’s deferred tax assets and liabilities consisted of the following (in thousands):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carryforward | $ | 34,478 | $ | 12,051 | |||||||
| Unrealized losses | 2,326 | — | |||||||||
| Equity-based compensation | 16,011 | — | |||||||||
| Capitalized costs | 1,902 | — | |||||||||
| Allowance/provision for losses | 5,994 | — | |||||||||
| Deferred rent | 2,276 | — | |||||||||
| Other | 311 | 617 | |||||||||
| Gross deferred tax assets | 63,298 | 12,668 | |||||||||
| Less: valuation allowance | (40,879) | (8,555) | |||||||||
| Total deferred tax assets | 22,419 | 4,113 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Unrealized gains | — | (7,246) | |||||||||
| Intangibles | (22,032) | — | |||||||||
| Other | (105) | (4,274) | |||||||||
| Total deferred tax liabilities | (22,137) | (11,520) | |||||||||
Net deferred tax asset (liability) | $ | 282 | $ | (7,407) | |||||||
In assessing the realizability of deferred tax assets, the Company, as of each reporting date, considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. Based on this evaluation, the Company has determined that it is not more-likely-than-not that its deferred tax assets will be realized, and has recorded a full valuation allowance against its deferred tax assets (with the exception of a small portion of foreign deferred tax assets),
The Company's valuation allowance increased by $32.3 million and $3.5 million during 2025 and 2024, respectively, as a result of the change in tax status as well as current year taxable losses.
The Company had approximately $118.8 million of US federal net operating losses during December 31, 2025, which do not have an expiration date. The Company has approximately $90.3 million of US state and local net operating losses during December 31, 2025, which begin to expire in 2037. The Company has approximately $1.9 million of non-US net operating losses during December 31, 2025, which begin to expire in 2041.
Cash paid during the period for income taxes consisted of the following (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Federal | $ | — | $ | — | $ | — | |||||||||||
| State | 259 | 198 | — | ||||||||||||||
| Foreign | 660 | 294 | 1,143 | ||||||||||||||
| Total | 919 | 492 | 1,143 | ||||||||||||||
Income taxes paid (net of refunds) exceeded 5 percent of total income taxes paid (net of refunds) in the following jurisdictions:
| Year Ended December 31, | |||||
| 2025 | |||||
| State | |||||
| New York | $ | 91 | |||
| Texas | 83 | ||||
| Foreign | |||||
| India | 176 | ||||
| Ireland | 116 | ||||
| Singapore | 288 | ||||
| United Kingdom | 80 | ||||
| __________________ | |||||
| *Jurisdictions below the threshold for the period presented. | |||||
The Company does not have any unrecognized tax benefits as of the reporting date. It is the Company's policy to recognize interest and penalties related to uncertain tax benefits on the interest expense line and other expense line, respectively, in the accompanying consolidated statements of operations. Accrued interest and penalties are included on the related liability lines in the consolidated balance sheets.
The Company has not provided foreign withholding taxes on the undistributed earnings of its foreign subsidiaries as of December 31, 2025, because, at the time, the Company had intended to permanently reinvest such earnings outside of the U.S. If these foreign earnings were to be repatriated in the future, the related U.S. tax liability will be immaterial, due to the participation exemption put in place by the 2017 Tax Act.
The Company and its Income Taxed Affiliates file income taxes in the U.S. federal, state and local and various foreign jurisdictions. Generally, the returns remain open for three years from the date of filing for federal, state and local and foreign tax examinations. The Company's tax years remain open as early as 2018 for New York and 2021 for US federal and other state and local jurisdictions.
On July 4, 2025, the One Big Beautiful Bill Act (the “Act”) was enacted into law. The Act includes significant changes to the U.S. tax code, including restoration of immediate recognition of domestic research and development expenditures and reinstatement of 100% bonus depreciation for qualifying property. The Company has assessed the Act’s impact and concluded that it did not materially affect its effective tax rate for the year ended December 31, 2025.
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.